Figures released by the FMDQ, show that total foreign exchange (FX) inflows into the FX market fell by 7% month-on-month (MoM) to US$4.1bn in March 2026. The modest MoM reduction appears to reflect seasonal patterns, consistent with a similar 5% MoM decline recorded in March 2025. Although inflows from foreign portfolio investors (FPIs), which are the main source of FX supply, only dropped slightly during the month, the overall drop in FX liquidity was mainly due to a sharp fall in inflows from the local individuals’ segment, which fell to US$22.2m from US$697.8m the month before.
- Given the reduction in inflows from these outlets and persistent demand pressures, the CBN’s targeted interventions became a major contributor to FX supply in March, with sales totalling US$691m, implying a steep 112% MoM increase.
- Within the domestic segment, local exporters remained a notable source of supply, although their contribution moderated by 2% MoM to US$770.3m. In contrast, inflows from local corporates increased by 7% MoM to US$507m.
- Turning to foreign sources, despite the global uncertainty triggered by the ongoing conflict in the Middle East, inflows from offshore participants remained resilient and continued to be the major source of supply during the month.
- Specifically, inflows from FPIs declined only mildly by 2% MoM to US$1.9bn and still accounted for nearly half (47%) of total FX inflows in March. Conversely, foreign direct investments (FDIs) inflows increased sharply by 74% MoM to US$69.1m.
- The strong appetite from foreign investors for domestic assets continues to be supported by elevated interest rates, which present attractive carry-trade opportunities.
- However, pressure on the naira was evident in March, as the exchange rate recorded a mild depreciation of 1.3% MoM to close at N1,387/USD.
- Looking ahead, the ongoing global uncertainty stemming from the Middle East conflict remains a significant headwind to capital inflows from offshore participants.
- Regardless, we expect the CBN to remain an active participant in the FX market to support liquidity and help stabilise the naira (see chart below)
